The Social Insurance Institution Kela pays reimbursements only on therapeutic medicines. If a pharmaceutical company does not apply for the reimbursement status for the product or the product remains outside the system for another reason, the company can freely price the product. However, all pharmacies must get the medicine at the same price.

 

If the company wants to have the medicine reimbursed by Kela, it must apply for the reimbursement status and reasonable wholesale price. The reimbursability and wholesale price decisions are made by the Pharmaceuticals Pricing Board PPB. Therefore, the reimbursable medicines are not freely priced. The price adopted by PPB is the maximum price. Depending on the competitive situation, the company may want to sell the medicine cheaper, provided that all pharmacies get it at that price.

 

The wholesaler gets its own slice of the medicine price, negotiating its distribution margin and agreeing this in a contract signed with the pharmaceutical company.

 

The wholesale price of the medicine determines its pharmacy retail price, following the medicine tariff adopted in the relevant Decree.

 

The trend in medicine prices differs from that shown by other goods and services. Normally, their prices increase through inflation while the wholesale prices of reimbursable medicines go down once PPB has adopted their reimbursable status and price.